Watkins v. MGA Entm't, Inc.

574 F.Supp.3d 747

Robin WATKINS, et al., Plaintiffs,

v.MGA ENTERTAINMENT, INC., Defendant.

Case No. 21-cv-00617-JCS

United States District Court, N.D. California.

Signed December 10, 2021

Mariana Aroditis McConnell, Nicole DeVanon, Kiesel Law LLP, Beverly Hills, CA, David S. Ratner, Shelley A. Molineaux, Ratner Molineaux, LLP, Walnut Creek, CA, Paul R. Kiesel, Kiesel Law LLP, Beverly Hils, CA, for Plaintiffs.

Frank P. Kelly, Amir M. Nassihi, Michael Kevin Underhill, Shook Hardy & Bacon L.L.P., San Francisco, CA, for Defendant.

ORDER GRANTING MOTION TO DISMISS SECOND AMENDED COMPLAINT

Re: Dkt. No. 35

JOSEPH C. SPERO, Chief Magistrate Judge

I. INTRODUCTION

This product defect case was originally brought as a putative class action by Plaintiffs Robin Watkins and Adam Sensney under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d)(1). They asserted claims for negligence, breach of express and implied warranties, and violation of California's Consumer Legal Remedies Act ("CLRA") and Unfair Competition Law ("UCL") against MGA Entertainment, Inc. ("MGA"), which manufactures, sells and distributes a toy line called L.O.L. Surprise!, based on allegations that a product in the line, the 2-in-1 Glamper Fashion Camper ("Glamper"), had a defective button in which a child's finger could become trapped. MGA brought a motion to dismiss, which the Court granted with leave to amend in its July 26, 2021 Order (dkt.31) ("the July 26 Order"). The Second Amended Complaint ("SAC") was filed on August 27, 2021. Presently before the Court is MGA's Motion to Dismiss Second Amended Complaint ("Motion"). The Court finds that the Motion can be decided without oral argument and therefore vacates the motion hearing set for December 17, 2021 pursuant to Civil Local Rule 7-1(b). The Further Case Management Conference set for the same date is also vacated. For the reasons stated below, the Motion is GRANTED.¹

II. BACKGROUND

The factual allegations in the Second Amended Complaint ("SAC") are largely the same as those in the First Amended Complaint ("FAC") and therefore, the Court does not summarize them here, except as relevant. Among other things, the factual allegations in the SAC are amended to remove an ambiguity in the FAC as to who purchased a Glamper for Sensney's daughter. See July 26 Order at 4 n. 2 ("Despite the suggestion in Paragraph 66 [of the FAC] that the Glamper may have been purchased by Sensney himself, Plaintiffs’ counsel stipulated at oral argument that the Glamper was, in fact, purchased by his mother-in-law."). The SAC makes clear that Sensney did not purchase the Glamper for his daughter but instead, that his mother-in-law purchased the Glamper for Sensney's daughter from an online retailer. SAC ¶¶ 28 ("Plaintiff Sensney came in possession of the Glamper when his mother-in-law purchased the Glamper for $89.99 from an online retailer for the benefit of Plaintiff Sensney's daughter, G.S., age 7, and shipped it to Plaintiff Sensney's home in Walnut Creek."); 51 ("Plaintiff's close family member purchased the Glamper manufactured by Defendant for his child's use because the child requested the Glamper as a present."). The SAC also alleges additional facts as to where the alleged express warranty ("Age 3+") was printed, alleging that it appeared on "the outside packaging of the Glamper" and on "the cover of the manual." SAC. ¶¶ 63–64.

The SAC also differs from the FAC in that only Sensney is named as a plaintiff; Watkins has been dropped as a plaintiff. In addition, only two claims are asserted in the SAC: 1) a claim for breach of implied warranty of merchantability (Claim One); and 2) breach of express warranty that the Glamper was safe for "Age 3+" (Claim Two).

MGA contends both of the claims asserted in the SAC are insufficiently alleged and asks the Court to dismiss them with prejudice. Motion at 1. With respect to the implied warranty claim, MGA argues that it fails because such a claim requires both horizontal and vertical privity under California law, and the SAC concedes there is no vertical privity. Motion at 5-9. MGA further contends the claim fails because Sensney has not alleged facts showing that the Glamper is unfit for its ordinary purpose and therefore "unmerchantable." Id. at 9-12.

MGA argues that the breach of express warranty claim fails because Plaintiff has not pled the precise terms of the warranty. Id. at 12-15. MGA further contends that to state a claim for breach of express warranty, Plaintiff must allege facts establishing that the express warranty was "part of the basis of the bargain" and Plaintiff fails to do so because he did not purchase the Glamper from MGA and thus, is not in privity with MGA. Id. at 15-17. MGA argues that while there is an exception to the privity requirement where an individual actually relied on an express warranty, that exception does not apply here because Plaintiff does not allege actual reliance. Id. (citing Burr v. Sherwin Williams Co. , 42 Cal. 2d 682, 695, 268 P.2d 1041 (1954) ). Finally, MGA argues that the SAC fails to state any claim because Sensney has not alleged that he suffered any injury as a result of the alleged breach of express and implied warranties. Id. at 17-18.

Plaintiff rejects MGA's argument that his breach of implied warranty claim fails for lack of vertical privity, arguing that under California law, vertical privity is not required because Sensney is a third-party beneficiary of the sale of the Glamper by an online retailer to his mother-in-law. Opposition at 2-5. Plaintiff acknowledges that this Court has rejected this reading of California law but asks the Court to revisit this question. Id. at 5 (citing See In re Seagate Tech. LLC Litig. , 233 F. Supp. 3d 776, 787 (N.D. Cal. 2017) ). In the alternative, Plaintiff contends he has alleged facts sufficient to state a claim under the Song-Beverly Act, Cal. Civ. Code § 1792, which does not require vertical privity, and requests leave to amend his complaint to assert such a claim if the Court finds that there is no third-party beneficiary exception to the vertical privity requirement on his breach of implied warranty claim. Id. at 5. Plaintiff also rejects MGA's argument that he has not alleged sufficient facts to show the Glamper was unmerchantable, citing the broad interpretation courts give to unmerchantability in the implied warranty context. Id. at 6-7.

In response to MGA's challenges to his breach of express warranty claim, Plaintiff argues that the words "Age 3+" are sufficient to allege the existence of an express warranty. Id. at 7-8. Moreover, he contends, because these words were printed on the packaging, they became part of the "basis of the bargain." Id. at 8 (citing Weinstat v. Dentsply Internat'l, Inc. , 180 Cal. App. 4th 1213, 103 Cal.Rptr.3d 614 (2010) ).

III. ANALYSIS

A. Legal Standards Under Rule 12(b)(6)

A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim on which relief can be granted. "The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint." N. Star Int'l v. Ariz. Corp. Comm'n , 720 F.2d 578, 581 (9th Cir. 1983). Generally, a plaintiff's burden at the pleading stage is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that a "pleading which sets forth a claim for relief ... shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a).

In ruling on a motion to dismiss under Rule 12(b)(6), the court analyzes the complaint and takes "all allegations of material fact as true and construe[s] them in the light most favorable to the non-moving party." Parks Sch. of Bus. v. Symington , 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal may be based on a lack of a cognizable legal theory or on the absence of facts that would support a valid theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990). A complaint must "contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 562, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Car Carriers, Inc. v. Ford Motor Co. , 745 F.2d 1101, 1106 (7th Cir. 1984) ). "A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). "[C]ourts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’ " Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (quoting Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). "Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ) (alteration in original). Rather, the claim must be " ‘plausible on its face,’ " meaning that the plaintiff must plead sufficient factual allegations to "allow [ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ).

B. Breach of Implied Warranty Claim (Claim One)

MGA challenges Plaintiff's breach of implied warranty claim on two grounds – failure to allege vertical privity and failure to adequately allege unmerchantability. Because the Court finds that the claim fails on the first ground, it need not reach the second.

As a preliminary matter, MGA's argument requires that the Court revisit its discussion of privity in the July 26 Order. In that Order, the Court found that the family exception to privity under Hauter v. Zogarts , 14 Cal.3d 104, 114 fn. 8, 120 Cal.Rptr. 681, 534 P.2d 377 (Cal. 1975) allowed Sensney to assert a breach of implied warranty claim...